Holiday surge in e-commerce could cause delivery crunch
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The Black Friday tradition of hordes of crazed shoppers storming big-box stores has become more subdued in recent years as shopping increasingly moves online. This year, as the pandemic surges, the trend will only intensify, causing an unprecedented volume of packages that need to be delivered.
Adobe predicts American consumers will shop 33% more online this holiday season.
The good news is we’ve had a bit of a dress rehearsal, said Adie Tomer, a fellow at the Brookings Institution Metropolitan Policy Program.
“Amazon was the great example where they had holiday-level crush in the spring,” he said. “But they got it under control through a mix of investment and learned expertise.”
The shutdowns early in the pandemic caused a sudden surge in e-commerce that no one had anticipated, leading to big delays. Since then, retailers and package carriers have been preparing, staffing up and building new fulfillment centers.
But that may not be enough, said Satish Jindel, president of shipping software company, ShipMatrix.
“People who are expecting packages should be prepared that many more of them this year will take a day or two days longer,” he said.
ShipMatrix estimates the demand for shipping will exceed capacity by about 7 million packages a day — about three times as many as last year.
FedEx and UPS have limited the volume of packages they take on to keep on-time performance up. So much of the overflow will end up with the United States Postal Service, said Gordon Glazer, a senior consultant with Shipware.
“Unfortunately, the Postal Service doesn’t have the ability to limit packages or volume and have become the de facto carrier of last resort,” he said.
USPS, which is a Marketplace underwriter, is still recovering from slowdowns over the summer, though on-time performance has improved.
Meanwhile, many retailers have partnered with on-demand delivery services like Instacart or Shipt, promoted curbside pick-up and started Black Friday sales early in the month, said Michael Brown, partner and retail lead with Kearney Management Consultants.
“Many retailers have been promoting early to try to push some of that demand forward,” he said. “But there will be early cutoffs to get deliveries in time.”
Brown said consumers who don’t get their orders in by Dec. 15 could end up with some empty space under the tree.
COVID-19 Economy FAQs
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This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.
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India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.
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